Aqua Bio Technology — Interim / Quarterly Report 2017

Aug 16, 2017

Profitable daily operations - Legal dispute affects earnings negatively

Profitable daily operations - Legal dispute affects earnings negatively

Aqua Bio Technology ASA (ABT) continues to deliver profits

on the day-to-day operations. Non-recurring costs relating

to the company's dispute with a former US-based customer

nevertheless resulted in a loss after tax of NOK 2.8 million

in the first half of 2017 and EBITDA of minus NOK 3.3

million. The corresponding figures for the corresponding

period the previous year were NOK 2.8 million and NOK 6.7

million, respectively.

Significant costs related to the dispute with a former

American customer still have a negative impact on ABT's

financial performance. It is nevertheless good to register

that the results of the day-to-day operations, isolated, are

positive. Following the implementation of an expanded

business model and an expectation of a positive outcome of

the dispute within short and by year end, ABT is positive to

the further development of the company.

The case filed against ABT was rejected by a US court in two

rounds in 2016 and sent to a final decision by arbitration

in the United Kingdom, the dispute resolution mechanism

originally agreed between the parties. The case was

originally scheduled for arbitration in London in September

2017, however, due to certain unforeseen delays at the

arbitrators office, the case may be slightly delayed and

expected to take place later in 2017. ABT's opinion is that

the company has a strong case and looks forward to the

decision by the arbitrator so that the company's management

can focus fully on day-to-day operations and on creating

value for its owners.

In total the dispute has so far resulted in costs of

approximately NOK 17 million in 2016 and 2017.

ABT's revenues in the first half of 2017 were NOK 8.9

million, compared to NOK 25.1 million in the same period

last year. This change is largely due to a change of the

minimum royalty payment structure per the original agreement

with the American partner Restorsea. Royalty-based revenues

to ABT are, from January of this year and onwards, based on

actual sales.

During the first half of the year, ABT implemented an

expanded business model, now including the marketing and

sales of skin care products for consumers and professional

users. New ingredients for the cosmetics industry are still

central to the company's business, but a more diversified

business model will, according to the company, result in

reduced risk and increased income potential.

In the first half of the year, ABT signed agreements

granting exclusive sales and distribution rights for two

skin care brands within the EMEA region (Europe, Middle East

and Africa), Moana Skincare and Cuvget. Per end of the

period Cuvget has been introduced in Norway, Sweden, Finland

and Portugal, while Moana has been introduced in Norway. The

company is in the process of expanding the distribution of

both brands to other important European markets as well.

Both brands are available via the company's online shops for

sale throughout Europe (EU).

ABT strongly believes in the expanded business model and

that it provides a solid fundament and a positive

development for the company going forward.

For further information, please contact CEO Arvid Lindberg,

telephone +47 98 24 54 10.

Aqua Bio Technology (ABT) is developing and commercializing

sustainable biotechnology for use in skin care products.

ABT's cosmetics ingredients are highly effective and they

provide the cosmetics industry with natural alternatives to

traditional ingredients. ABT is also marketing and

distributing natural skin care end products developed by

partners towards consumers and professional users. Aqua Bio

Technology is listed on the Axess market of the Oslo Stock

Exchange.